Perma-Fix Environmental Services(PESI) - 2025 Q2 - Quarterly Report

Revenue Performance - Overall revenue increased by $600,000 or 4.3% to $14,586,000 for Q2 2025, compared to $13,986,000 in Q2 2024[102] - Treatment Segment revenue rose by $3,054,000 or approximately 36.6% to $11,397,000 for Q2 2025, driven by increased waste volume and higher average prices[102] - Services Segment revenue decreased by $2,454,000 or 43.5% to $3,189,000 for Q2 2025, attributed to delays in project mobilizations and procurements[102] - Consolidated revenues increased by $600,000 or 4.3% for the three months ended June 30, 2025, compared to the same period in 2024, totaling $14,586,000[110] - Treatment Segment revenue increased by $3,054,000 or 36.6% for the three months ended June 30, 2025, primarily due to higher waste volume and average price[111] - Services Segment revenue decreased by $2,454,000 or 43.5% for the three months ended June 30, 2025, attributed to project-based revenue variability[111] - For the six months ended June 30, 2025, consolidated revenues increased by $902,000 or 3.3%, totaling $28,505,000[112] - Revenue from international markets reached approximately $3,589,000 for the six months ended June 30, 2025, an increase of $2,559,000 or 248.4% compared to the same period in 2024[105] - Federal government contracts accounted for approximately $9,204,000 or 63.1% of total revenues in Q2 2025, down from $9,669,000 or 69.1% in Q2 2024[145] - Revenue from federal government clients was approximately $17,609,000 or 61.8% for the first half of 2025, compared to $18,699,000 or 67.7% in the same period of 2024[145] Profitability and Expenses - Gross profit increased by $2,853,000 or 218.5% for Q2 2025, compared to the same period in 2024[102] - Gross profit for the quarter ended June 30, 2025, increased by $2,853,000, resulting in a gross margin of 10.6% compared to a loss margin in the previous year[118] - Treatment Segment's gross profit increased by $2,763,000 or approximately 230.8% for the quarter ended June 30, 2025, driven by higher revenue from waste volume[118] - SG&A expenses increased by $675,000 or 19.5% for Q2 2025 compared to Q2 2024[102] - SG&A expenses increased by $675,000 or 19.5% for the three months ended June 30, 2025, totaling $4,130,000[120] - SG&A expenses increased by $1,146,000 (16.4%) for the six months ended June 30, 2025, totaling $8,145,000 (28.6% of revenue) compared to $6,999,000 (25.4% of revenue) in 2024[121] - Cost of goods sold decreased by $2,253,000 or 14.7% for the quarter ended June 30, 2025, totaling $13,039,000[114] Losses and Financial Position - Loss from continuing operations before taxes was $2,583,000 for Q2 2025, compared to a loss of $4,946,000 in Q2 2024[109] - The company reported a net loss of approximately $6,083,000 for the first six months of 2025, compared to a net loss of approximately $7,243,000 in the same period of 2024[128][129] - Cash used in operating activities of continuing operations was $3,773,000 for the first six months of 2025, an improvement from $5,570,000 in 2024[127] - As of June 30, 2025, the company had cash on hand of approximately $22,594,000 and no outstanding borrowing under its revolving credit[127] - Working capital decreased to $21,481,000 as of June 30, 2025, from $28,283,000 as of December 31, 2024, primarily due to operational losses[131] Future Outlook and Projects - The company expects revenue contribution from the West Valley Project contract, valued at up to $3 billion, in the second half of 2025[105] - DFLAW program at Hanford, Washington is anticipated to begin initial tank waste treatment operations in Q4 2025[105] - Capital expenditures for the twelve months ending December 31, 2025, are anticipated to be up to $6,000,000, focusing on PFAS technology and regulatory compliance[136] - The company plans to fund its capital expenditures from operations, liquidity, and/or financing[136] - The second generation of the Perma-FAS system is anticipated to be deployed in Q4 2025, with engineering refinements underway[150] Regulatory and Compliance - The company is subject to rigorous federal, state, and local regulations, which may result in fines or remediation costs[151] - The company has removed the quarterly fixed charge coverage ratio (FCCR) testing requirement, which will be triggered if daily liquidity falls below $5,000,000[147] - The Facility Fee has been revised from 0.375% to 0.500%, reverting back to 0.375% once the FCCR ratio meets the required threshold[147] Environmental Initiatives - The company has completed the first full-scale commercial Perma-FAS system for PFAS destruction, processing approximately 10,000 gallons of AFFF liquids[149] - An additional 50,000 gallons of PFAS-containing waste is expected to be received in the coming months for treatment[149] - As of June 30, 2025, total accrued environmental remediation liabilities were $764,000, a decrease of $3,000 from the previous balance[153] Interest and Debt - Interest income rose by approximately $249,000 (approximately 53.1%) for the six months ended June 30, 2025, primarily due to higher interest from funds in the money market deposit account[122] - As of June 30, 2025, the company had standby letters of credit totaling approximately $3,200,000 and bonds outstanding of approximately $21,044,000[142] Procurement and Administration - The company experienced delays in federal procurements due to changes in administration, impacting operations in the first half of 2025[146] - The effective tax rate for the three months ended June 30, 2025, was approximately 0%, compared to 23.5% for the same period in 2024, influenced by a full valuation allowance against deferred tax assets[123]